Feb 15, 2013, 12.41 PM | Source: CNBC-TV18
Ajay Srivastava, CEO of Dimensions Consulting believes correction in the midcap space was healthy and stocks are getting to attractive levels at the moment.
Ajay Srivastava (more)
CEO, Dimensions Consulting | Capital Expertise: Equity - Fundamental
"On the investment platform things like MCX, Financial Technologies, Tata Global Beverages are now coming to levels where you want to consider entering them irrespective of what happens to the market. You need to start building your portfolio," he explained.
Besides, Srivastava expects index stocks to outperform in 2013. But, he feels investors must be nimble in trading midcaps and book profits at regular intervals. He further added that foreign investors are keen to accumulate blue chips on every decline.
Srivastava recommends a buy on Hindalco at Rs 110 per share with a target of Rs 130 per share. Jaiprakash Associates also remains a trading bet with a target of Rs 90 to Rs 100 per share, he said. According to him, Fortis Healthcare too is an interesting buy at current levels. However, he is of the opinion that infra counters like GMR and GVK Power must be avoided at the moment.
Here is the edited transcript of the interview on CNBC-TV18.
Q: Midcaps have got a right hammering since we last spoke. Are you beginning to feel bit more skeptical about the market?
A: No, we are in fact feeling a lot more comfortable now because the run up in the midcap was very uncomfortable, it didn’t have fundamentals behind it. It was just pure domestic money trying to enter the market at a late stage of a rally. We are getting a lot more comfortable now that the pricing has corrected to the right levels and may correct a little more.
It is like a healthy balance in the market. Plus, the biggest point is that now you are getting shares to the point where if you get another 10-20 percent, you would want to pick up those shares. I am not saying midcaps, I am talking of the good quality frontline stocks. They are correcting, even in the midcap space some very good names are correcting.
Let us not talk of what I call the trash basket. Suzlon Energy is one of them. That is called a trash basket but on the investment platform things like MCX, Financial Technologies, Tata Global Beverages are now coming to levels where you want to consider entering them irrespective of what happens to the market. You need to start building your portfolio.
Q: What do you make of this narrowness in the market? Everyday 8 to 10 high quality stocks keep the index afloat but, the rest of the market is crumbling below it.
A: The point here is very simple. The market has got two segments of investor population and two dynamics. The big dynamics deals with the bigger players which are the index stocks. They will still give the best returns over the next 12 months and the moment there is a correction, buying comes back, like we saw in HUL where buying interest renewed once it saw a big correction.
The IT stocks haven't come down from their recent highs. The HDFC twins are close to their historic highs and Mahindra & Mahindra (M&M) is at a historic high. So you are not seeing correction in those stocks and there is a lot of money waiting to enter those stocks as well. The moment you see correction, people come into the stocks.
The other is the non-index stocks. The situation there is that you are going to really cherry pick. You can say all are bad but, I don't think that is true and not everything is bad. Some are good like MCX, Financial Technologies, Tata Global Beverages, Havells India and United Breweries. These are good stocks there.
What has happened is that people are taking big trading risks on an equity investment platform. Suzlon Energy, IVRCL are stocks where you need to get in and get out. If you held up on your position, you will end up making losses and that is a given in those stocks because they were not quality stocks.
However, I still say that till Foreign Institutional Investor (FII) is backing this country and the government is all out to welcome them, do not exit. In fact, the time to rebuild keeps coming and the market gives you opportunity to enter every time. That is the beauty of this market.
People who get left out need to enter, you don't feel bad about entering the mainline. Let us say HDFC Bank , it may go down by another Rs 30 but, over a year it will give you 25 percent returns. So be careful, use this correction. I am saying don’t get despondent but use the correction to rejig your portfolio and move into stocks you want to be there with.